Fare Card Fraud Costing CTA $6.5 Million

Fraudulent use of CTA free-ride and reduced-fare cards at rail stations has cost the transit agency almost $6.5 million since a crackdown was launched late last year, but suspicious use of the cards was down more than 20 percent, CTA investigators said Tuesday.

The transit agency also has confiscated more than 5,000 cards that unauthorized people tried to use, officials said.

The transit agency is expected to release the results Wednesday when CTA President Dorval Carter Jr. testifies in Springfield about the impact of proposed cuts in transit funding sought by Gov. Bruce Rauner.

Carter told the Tribune on Tuesday that misuse of cards issued to low-income senior citizens and people with disabilities represents “revenue that could have come to the CTA.” But the public has become more aware since last fall that the CTA is “monitoring the use of these cards and trying to identify inappropriate use when we can,” Carter said.

While enforcement of free-ride and reduced-fare card use at rail station turnstiles remains high, the number of card confiscations has dropped 48 percent since November, said Andrell Holloway, CTA chief internal auditor.

The ongoing investigation has not yet been extended to buses, officials said. The largest number of violations have been uncovered at the CTA’s busiest rail stations, including Clark/Lake downtown, the Belmont station on the North Side served by the Red, Brown and Purple/Evanston Express lines and the Red Line 95th Street station, officials said.

Card confiscations averaged 137 per week from about mid-November to mid-May, down from 262 confiscations per week on average during the first seven weeks of the sting that started last fall, Holloway said.

In addition, excessive use of the cards, defined as 10 or more times a day on at least two days in a week, has declined 21 percent, Holloway said. Still, 5,091 instances of suspicious use of the cards were detected during a recent seven-week period, he said.

The CTA estimates that only 1 percent of the more than half-million cards in circulation are being misused. However, intentional card-sharing is suspected as a leading cause among the fraudulently used cards, officials said.

In many cases, senior citizens who were issued a card may assume it’s permissible to lend the card to relatives and friends, CTA security officials said. The majority of card violators who have been caught tend to be school-age riders and young adults, officials said.

But the crackdown also has found cases in which people sell rides to strangers for as little as $1 by tapping borrowed, lost or stolen free-ride cards on rail fare readers, officials said.

The CTA has confiscated almost 5,400 cards that people who were not the registered card owners attempted to use, the agency said. The CTA sent letters to the rightful owners of the confiscated cards asking them to fill out an affidavit explaining how their card got into someone else’s possession and to promise they would abide by the proper use of the card as a condition of the CTA returning it.

Thirty-eight percent of cardholders responded and all of them had their cards returned to them, Holloway said. But almost two-thirds of the respondents said they had no clue how the card was fraudulently used, Holloway said.

The CTA and the Regional Transportation Authority, which has issued roughly 600,000 free-ride, reduced-fare and paratransit cards, is retaining the confiscated cards until the 62 percent of the registered card owners who did not respond to the letter are heard from, or their cards expire, CTA spokesman Brian Steele said.

The CTA said it provides more than $100 million annually in free- and reduced-fare rides. Free rides totaled 4.3 million in May, according to the transit agency. Last year, the state reimbursed the CTA about $28 million.

Rauner’s 2016 budget calls for cutting almost $170 million from state funding to the CTA, Metra and Pace, as well as Americans With Disabilities Act paratransit services. The CTA would face a $130.1 million annual cut, according to the RTA. Metra would lose $20.8 million in state funding, and Pace would receive a roughly $10 million cut. Paratransit services, which are provided through Pace, would lose about $8.5 million, according to the RTA.

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